| Threat to steel supply sends shock wave across industry - 2010/07/19 | |
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News Article: 5865 has been read 263 times. |
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| SA's reputation on the line Disruptions to the supply of steel due to the dispute between Kumba Iron Ore and ArcelorMittal South Africa will spell disaster for some industries. Industry players said yesterday that demand and supply factors would push up prices, create shortages of steel, affect exports as well as heavily affect planned projects such as Eskom's expansion programme. Roger Pitot, the executive director of the National Association of Automotive Component and Allied Manufacturers, said a supply shortage would be "a disaster" for manufacturers of automotive components. Pitot said the reason for this was that any shortage of steel and steel allocations imposed on companies would result in some companies not being able to meet their export commitments "never mind their domestic supplies". "It will definitely affect exports and local supply and therefore impact on vehicle supply as well. It will be a disaster if ArcelorMittal SA cuts back on steel production," he said. Pitot said the shortage of steel would lead to price rises because of supply and demand factors and while some companies would make alternative arrangements, "you can't turn the tap on overnight". Pitot stressed that the Department of Trade and Industry needed to intervene in the dispute to ensure it was resolved without it strategically affecting South Africa's ability to produce goods. "Once you lose an export contract, you never get it back and South Africa's reputation as a reliable supplier of automotive exports will be ruined. With the recent Transnet strike we came close and managed to avert this but this will be a disaster," he said. Attempts to obtain comment from the procurement committee of the National Association of Automobile Manufacturers of SA at the weekend were unsuccessful. Peter Mangold, the divisional manager for procurement at Mercedes-Benz South Africa, said the firm only used a very small proportion of South African steel products and this was not used directly but by the firm's suppliers. Mangold said it needed a special quality steel for its current C-Class vehicles and this was imported from Germany. Any shortage of steel supply is also likely to affect South Africa's building and construction industries. Pierre Fourie, the chief executive of Master Builders South Africa, said that all the steel went into structures and the Reinforced Concrete Engineers Association would be better able to comment on the impact. Attempts to obtain comment from the association were unsuccessful. But Henk Langenhoven, a senior economist for the SA Federation of Civil Engineering Contractors, did not believe the dispute would have a major impact on the local civil engineering industry. Langenhoven was not aware of any international steel shortage and he believed that steel could be imported "at random" although it would take a while for supplies to get to the country. "Steel is such an internationally traded commodity. I don't think there is a problem at the moment with buying steel," he said. "We (the civil engineering sector) are in such a massive decline at the moment and most of the non-residential structural work for hotels and shopping centres, which are important for the engineering market, are slowing down dramatically. "We have built all the bridges for the Gauteng freeway improvement project. It may affect the construction of Medupi and Kusile (power stations). But I'm convinced you will be able to buy steel internationally." Roy Cokayne |
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| Source: Business Report | Date: 2010/07/19 |
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